China Roundup: Emergency medical supplies to Lebanon, local government investment, metal stocks

Local government investment

China has allocated 200 billion yuan ($28 billion) for local government investments in 2023 to meet its economic growth targets, announced by the National Development and Reform Commission (NDRC). Despite this support, investors were disappointed by the modest size of the stimulus package, as many had expected more substantial measures amid ongoing economic challenges, such as weak spending and high youth unemployment. CNN explained the government will provide 100 billion yuan from the central budget and 100 billion yuan for projects to aid local governments struggling with debt.

Economic growth

China's economic planner, Zheng Shanjie, expressed confidence in achieving 2024 economic goals despite facing complex internal and external challenges. The National Development and Reform Commission (NDRC) plans to bring forward $14.12 billion from the 2025 budget to support local projects amid increasing downward pressure on the economy. According to VOA News, recent stimulus measures have boosted stock market sentiment, although concerns remain about consumer and business confidence, particularly in the struggling housing market. Zheng noted that policymakers will focus on enhancing livelihoods and stimulating domestic demand.

Metal stocks

Metal stocks in India declined sharply, with the Nifty Metal index falling 3.15% to its lowest level since September 24, primarily due to China's lack of new stimulus measures. The National Development and Reform Commission's briefing disappointed analysts expecting substantial fiscal support, instead announcing only a modest CNY 100 billion investment plan. This led to a drop in copper prices, which fell to a two-week low.

Emergency medical supplies to Lebanon

China's aid agency announced it will provide emergency medical supplies to Lebanon in response to the escalating conflict with Israel and Hezbollah. The aid, requested by the Lebanese government, aims to assist with the humanitarian crisis as airstrikes have resulted in numerous casualties. Recently, the Israeli military reported killing Suhail Hussein Husseini, a key Hezbollah logistics commander, raising tensions further amid ongoing strikes between the two sides.

Provisional tariffs on EU brandies

China has imposed provisional tariffs of 30.6% to 39% on European brandies, including Remy Martin and Hennessy, following the EU's approval of duties on Chinese electric vehicles (EVs). The Hindustan Times explained that this retaliatory move aims to bolster China's negotiating position in upcoming talks with the EU regarding tariffs on Chinese EVs. The brandy tariffs, which require importers to deposit the tariff amount with customs starting Friday, stem from a preliminary investigation that found European brandy to be priced below market value in China.